Like many of its regional neighbors, the Vietnamese pharmaceuticals market is still underdeveloped and suffers from poor regulatory and intellectual property standards. Low-cost, locally produced generic drugs as well as counterfeit products accounts for a sizeable proportion of drug consumption due to low consumer purchasing power and an under-funded healthcare system.
Vietnamese drug makers comprise only 40% of the total medicines market while imports of raw material used in drug production represents around 90%. Heavy reliance on pharmaceutical imports makes local firms to be unable to compete with international groups.
Counterfeit drugs make up a significant amount of consumption due to the lax enforcement of legislation, which not only negatively impacts the original producers but also jeopardizes public health. The Ministry of Health of Vietnam (MoH) estimates that the country’s traditional medicine market consists of approximately 500 products, with only 50 of these being legal. Acknowledging that the high levels of fake and low-quality drugs are due to lax management, the MoH is planning to implement more drastic punishments for producers and importers found circulating such products.
Another issue is erratic pricing. Due to a lack of controls, medicine costs fluctuate wildly throughout the supply chain. A recent survey of pharmacies showed that the prices of 65 medicines made locally had increased, with some rising as much as 40% on a month-on-month. Under the new price regulation rules, violating companies and organizations will be fined heavily.
Since Vietnam’s WTO accession, more and more foreign pharmaceutical firms are operating in Vietnam. There are currently 178 domestic pharmaceutical producers active in the country. The government aims to improve the sector by increasing foreign drug trade and the number of drugs producers in the country, and improving domestic drug output in quantitative and qualitative terms.